Unemployment & Labour force issues in India Employment growth is a function of growth of GDP and employment elasticity.

Indian economy has sustained a relatively high growth of over 6 per cent for about two decades and is expected to grow at that. When we see the beginning of 1990s, it saw a start of economic reforms, involving deregulation of domestic economic activities and liberalisation of foreign trade and investment regimes. Public sector was no longer seen as an employment provider; it had, in fact, experienced a continuous decline in employment since mid-1990s. Higher growth of the economy induced by liberalisation was expected to lead to a faster expansion of employment. But it did not happen this way though the growth rate picked up speed the employment growth saw a decline. Indias has seen a significant record with regards to employment growth; however, it did not foresee with regards to a faster growth of labour force. Though there was a shift in contribution of agriculture in the gross domestic product has reduced, it still continues to be the largest employer as the non-agricultural sectors have not generated enough employment to affect a shift of workforce. It has been seen that most of the employment growth has been contributed by the unorganised, informal sector which is has poor incomes and low conditions of work. The GDP growth was low during 2000-2005 however there was high employment growth which is was said to be demand-led and productive. Though the employment rate had become stagnant during mid 2000s, Employment growth in the secondary sector, consisting of mining, manufacturing, electricity, water and gas, and construction, were relatively high. It was said that it was the highest among all the three sectors, with a growth of around 3.5 per cent. When we the ten year period, i.e. 2000-2010, even employment in the services sector grew at a rate of 3.6 per cent per annum, as against the aggregate employment growth of 1.5 per cent. Two service activities, viz. Technology (IT) and Tourism have attracted special attention of policy makers as source of rapid expansion of employment opportunities. However it is said that growth alone cannot solve the problems of poverty and unemployment, and therefore, a number of special employment and poverty alleviation programmes should be launched. With the increase in population the work force is increasing, but the major issue is: are there enough jobs for the labour available? In India the population is increasing rapidly. The growth of population directly resulted in unemployment as it made a large addition to labour force. It is said that the rate of job expansion could never be as high as population growth would have required.

Growth rate of labour force depends on the growth of population (in earlier periods) and labour force participation rate. The labour force participation rate is the percentage of working-age persons in an economy who: a) Are employed and b) Are unemployed but looking for a job. Labour participation rate in India was 55.60 as of 2010. Its highest value over the past 20 years was 61.00 in 1990, 60.5 in 2000 while its lowest value was 55.60 in 2010. The employment planning of the government is not adequate in comparison to population growth. In India near about two lakh people are added yearly to our existing population. But the employment opportunities do not increase according to the proportionate rate of population growth. As a result there is a gap between the job opportunities and population growth. Economists have forecasted that addition to labour force is estimated to be around 8.6 million per year during the Twelfth Five Year Plan period. Going by these estimates and projections, the Twelfth and the Thirteenth Plans would need to provide about 13 million employment opportunities every year to generate productive employment to almost every one looking for work. There are people who have not being employed in various places because of the fact that they either not skilled or because there are not enough jobs available for every person. The unemployment has had a ripple effect. It will lead to rich getting richer and poor becoming poorer meaning there would be rich poor divide. It may also lead to anti social elements, as when people do not money for even basic necessities they might resort to stealing and robbing and cause problems to society.

There are two main strategies for reducing unemployment 1. Demand side policies to reduce demand-deficient unemployment (unemployment caused by recession) Fiscal policy can decrease unemployment by helping to increase aggregate demand and the rate of economic growth. The government will have to cut taxes and increase government spending. With an increase in aggregate demand, there will be an increase in Real GDP. If firms produce more, there will be an increase in demand for workers and therefore lower demand-deficient unemployment. Monetary policy would involve cutting interest rates. Lower rates decrease the cost of borrowing and encourage people to spend and invest. This increases aggregate demand and should also help to increase GDP and reduce demand deficient unemployment.

2. Supply side policies to reduce structural unemployment Education and Training will aim to give the long term unemployed new skills which enable them to find jobs in developing industries which require skilled labour. Employment Subsidies should be given. Firms could be given tax breaks or subsidies for taking on long term unemployed. This helps give them new confidence and on the job training.